U.S. home prices unaffordable for many workers:

U.S. home prices unaffordable for many workers:

study By Andrew Stern

1 hour, 51 minutes ago

CHICAGO (Reuters) - U.S. home prices may have dipped over the past year, but many American workers would still struggle to afford a median-priced home in major cities, a new study said on Wednesday.

"American workers are really not gaining ground and they're so far behind in the first place," said Barbara Lipman, research director for the nonprofit Center for Housing Policy, which conducted the study.

While the median home price in the 202 largest metropolitan areas declined 2 percent from a year ago to $248,000 in the third quarter of 2006, mortgage rates rose enough over the year that homes actually became less affordable as pay did not keep pace.

"The real story is what happened to salaries," Lipman said. "Lower-paid occupations -- such as in retail, or home health workers -- their salaries went up only about 3 percent."

The study found an annual income of nearly $85,000 was needed to afford the median-priced U.S. home.

In the New York metropolitan area, a $500,000 median-priced home required a $171,000 annual salary. The median-priced home in San Francisco, the most expensive U.S. market, was $759,000, requiring income of $260,000. In less-expensive Chicago, the median-priced home cost $254,000, requiring an $87,000 salary.

On the opposite end of the spectrum, Mansfield, Ohio, homes cost a median $85,000, requiring $29,118 in income.

The study assumed home buyers needed a 10 percent down payment and could afford to pay 28 percent of their income on mortgage payments, property taxes and home insurance.

In reality, many households expend a much higher percentage of their incomes on mortgage payments, Lipman said. To afford that, consumers cut other expenses such as for health care and transportation, she said, citing research showing unaffordable housing is the major reason families lack health insurance.

Other ways families cope with high housing expenses is to work longer hours or extra jobs, or by crowding in more income producers, she said. An October 2006 survey by the group found families who seek to buy less-expensive homes in further-out suburbs -- adding to urban sprawl -- pay so much more for transit that it eliminates the savings.

While home prices range widely across the country, wages for low-wage jobs -- from teachers to janitors -- are about the same no matter where they are located, Lipman said.

The report cited housing aid programs offered by some big-city hospitals that have plenty of modestly-paid workers.

"For the low- to moderate-income individuals that we're talking about, they're not going to be helped by marginal declines in home prices," Lipman said. "The only way to address the problem is to create more affordable units (homes) -- which may mean higher density units, townhouses and condos."

"For the low- to moderate-income individuals that we're talking about, they're not going to be helped by marginal declines in home prices," Lipman said. "The only way to address the problem is to create more affordable units (homes) -- which may mean higher density units, townhouses and condos."

I don't neccisarily agree with this idea alone. The concept in itself is good though--but this concept "creates" a lot of other issues that must be addressed. What really needs to happen, is the inflated mortgage prices in major metropolitan areas need to be deflated! The price of real estate has been artificially inflated for the past 3-4 years now. Private sellers, and Builders need to stop being so profit greedy, and reduce the selling prices of the properties they've listed for sale. The average price of real estate has been criminal for the past 3-4 years, and really needs to end! Families are driving themselves into severe debt trying to afford the cost of a median home prices in major metropolitan areas.

Here in southern California, home prices are obscenely expensive. The average home in San Diego sells for over 700k!!! That takes an executive salary 250k plus which is way above means for most folks. Of course its a bubble and with easy credit loans disappear it will deflate hopefully.

Along this same theme,................

There's this article:

By Blaine Harden
WashingtonPost.com
Updated: 10:01 a.m. ET March 4, 2007

PORTLAND, Ore. - Punctuating a fundamental change in American family life, married couples with children now occupy fewer than one in every four households -- a share that has been slashed in half since 1960 and is the lowest ever recorded by the census.

As marriage with children becomes an exception rather than the norm, social scientists say it is also becoming the self-selected province of the college-educated and the affluent. The working class and the poor, meanwhile, increasingly steer away from marriage, while living together and bearing children out of wedlock.

"The culture is shifting, and marriage has almost become a luxury item, one that only the well educated and well paid are interested in," said Isabel V. Sawhill, an expert on marriage and a senior fellow at the Brookings Institution.

Marriage has declined across all income groups, but it has declined far less among couples who make the most money and have the best education. These couples are also less likely to divorce. Many demographers peg the rise of a class-based marriage gap to the erosion since 1970 of the broad-based economic prosperity that followed World War II.

"We seem to be reverting to a much older pattern, when elites marry and a great many others live together and have kids," said Peter Francese, demographic trends analyst for Ogilvy & Mather, an advertising firm.

In recent years, the marrying kind have been empowered by college degrees and bankrolled by dual incomes. They are also older and choosier. College-educated men and women are increasingly less likely to "marry down" -- that is, to choose mates who have less education and professional standing than they do.

Married couples living with their own children younger than 18 are also helping to drive a well-documented increase in income inequality. Compared with all households, they are twice as likely to be in the top 20 percent of income. Their income has increased 59 percent in the past three decades, compared with 44 percent for all households, according to the census.

Marriage raises earnings
As cohabitation and out-of-wedlock births increase among the broader population, social scientists predict that marriage with children will continue its decades-long retreat into relatively high-income exclusivity.

Jim and Michelle Fitzhenry live with their 5-year-old son, John Robert, in a four-bedroom house in a gated community high in the wooded hills west of Portland. Sixteen years ago, when Jim met Michelle, they fell in love because they liked each other's looks -- and loved each other's values.

"What attracted me to Michelle was her kindness and her honesty, but also her discipline, ambition and achievement," said Jim, who has a law degree and an MBA. He is a senior vice president at FLIR Systems, a Portland company that makes night-vision equipment.

Those same personality traits, Michelle said, drew her to Jim. She has a bachelor's degree in business administration and worked for a decade as an executive at Plum Creek Timber Co. in Seattle. The Fitzhenrys, who married 10 years ago, are an example of what sociologists call "assortative mating," the increasing tendency of educated, affluent people to unite in marriage.

When the Fitzhenrys married (he was 42, she was 32), it changed the way they managed their finances, which Jim said had been in a "death spiral" when they were single. Michelle quickly paid off $20,000 in credit-card debt. Jim cut up most of his credit cards and got rid of a BMW convertible.

Among its many benefits, marriage raises the earnings of men and motivates them to work more hours. It also reduces by two-thirds the likelihood that a family will live in poverty, researchers have learned.

"Although we didn't plan it that way and we certainly didn't marry for money, it turned out that a byproduct of the values we both care about has been financial success," said Michelle, who places the couple's annual earnings between $350,000 and $400,000, much of which is invested conservatively.

'We thought we were normal'
The marital unions of high earners are a significant factor in the growth of income inequality since the 1970s, according to Gary Burtless, an economist at Brookings. His research attributes 13 percent of the increase in the nation's income inequality to such couples.

The Fitzhenrys said they had no idea marriage with children was becoming an elite institution. "By getting married and having a kid, we just assumed we were doing what everyone else in the country was doing," Jim said. "We thought we were normal."

As far as marriage with children is concerned, the post-World War II version of normal began to fall apart around 1970.

"Before then, if you looked at families across the income spectrum, they all looked the same: a mother, father, kids and a dog named Spot," said Sawhill, of the Brookings Institution.

Around that time, rates of divorce and cohabitation were rising sharply -- and widely publicized.

"What I don't think the public knew then or knows now is that well-educated, upper-middle-class professionals did not engage in these activities nearly as much as less-advantaged families," Sawhill said.

College-educated women, whose numbers have risen sharply since 1980, often live with a partner and postpone marriage. But in most cases, they eventually marry and have children, and divorce at about half the rate of women who do not finish high school.

While the marriage gap appears to be driven primarily by education and income, it does have a racial dimension.

Marriage and childbearing seem to be more "de-coupled" among black people than white people, with about a third of first births among white women coming before marriage, compared with three-quarters among black women, according to a recent review of research on cohabitation. As for children, the review found that 55 percent of blacks, 40 percent of Hispanics and 30 percent of whites spend some of their childhood with cohabiting parents.

Class, though, is a much better tool than race for predicting whether Americans will marry or cohabit, said Pamela Smock, co-author of the review and a University of Michigan sociology professor.

"The poor aren't entering into marriage very much at all," said Smock, who has interviewed more than 100 cohabitating couples. She said young people from these backgrounds often do not think they can afford marriage.

Arguments that marriage can mean stability do not seem to change their attitudes, Smock said, noting that many of them have parents with troubled marriages.

'Marriage ruins life'
Victoria Miller and Cameron Roach, who have been living together for 18 months, are two such people, and they say they cannot imagine getting married.

She is 22 and manages a Burger King in Seattle. He is 24 and works part time testing software in the Seattle suburb of Redmond. Together, they earn less than $20,000 a year and are living with Roach's father. They cannot afford to live anywhere else.

"Marriage ruins life," Roach said. "I saw how much my parents fought. I saw how miserable they made each other."

Miller, who was pressured by her Mormon parents to marry when she was 17 and pregnant, said her short, failed marriage and her parents' long, failed marriage have convinced her that the institution is often bad for children. Shuttled between her mom and dad, she moved eight times before she was 16.

"With my parents, when their marriage started breaking down, my dad started to have trouble at work and we spent years on government assistance," Miller said.

Her two young sons live with their father.

"For most Americans, cohabitation will continue to increase over the coming decades, and the percentage of children born outside of marriage is also going to increase," Smock said.
© 2007 The Washington Post Company

http://www.msnbc.msn.com/id/17445891/page/2/

Cohabitation replacing marriage. Married couples have children because they have the money??!!

People can't afford to buy an average home in areas where they live??!!

These are symptoms of a much bigger problem.

Good info folks-
My strategy is to wait at least another 2 years to buy a new home. Home prices are finallyn dropping here in San Diego and I can save up for the down payment! With a big downpayment, I can get better loan and by then my FICO should be much higher since it will be 3.5 years since the discharge process of the BK.

If you can hang on another two years, you may actually find that Real Estate prices will fall so far that many of you will effectively get much of your financial BK losses back when you buy another home in 2 years!

Real Estate prices increased by over 90% from 1999 to 2003 while salaries only increased by 20% over the same period. Real Estate prices then increased another 40% from 2004 - 2006 while salaries only increased by 10%over the same period. This bubble has already began to stretch out within the last 12 months and will POP for sure at some point within the next 12!

A prime example of how crazy it got and how fast, we had the opporunity to purchase 4 acres of land, there was no home on the property, it was located in a good established country area, no restrictions and could buy it for $8000.00. That was 7 years ago and we simply couldn't afford it at the time 9we had just bought our home). Well it sold and then sold again to a developer who bought up alot of the land in that area and that same piece just sold again with no home on it for building a home in the new flashy restricted neighborhood that has been built for $145,000.00!!!!! Just for the property. That it the insanity of over- inflated housing/property prices. Hopefully there will be an end to this at some point. Greedy developers.

I agree- in southern California, home prices dropped about 5-10% this year and are falling with the credit tightening and subprime explosion.

After my ch discharge in March 2006, I set out to rebuild my credit. I've been current on all bills and credit payments on time since then and now my FICO is between 646-701 which is better than the 550 FICO score that I had in 2006. So I am confident that in 2 years, I can boost the scores up to mid 700's and buy a modest home. My car is paid off- I kept it through the BK since I only owed a couple grand on it and now it helps my credit.

[removed] The prices for houses in the USA decrease[/url] on a background of negative effect which on the market of the real estate. Interesting articles about this...

[removed]The prices for houses in the USA decrease[/url] on a background of negative effect which on the market of the real estate. Interesting articles about this...

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